Layer 1 blockchains had a great 2021, where Bitcoin’s ‘only’ 70% return was among the worst in the group. The ‘Ethereum killer’ blockchains did even better than Bitcoin and Ethereum’s returns in 2021. One of the leaders in that group is Avalanche.
In 2021, Avalanche (AVAX) rose from $3.46 to $144.63 for a 30x return, but after a huge run like that, it’s natural to wonder, can they keep going and make money from here if I buy now? We think the answer is yes, and not just because Avalanche is down ~60% from its high in November.
Therefore, in this article, you will discover 10 reasons why we think you should buy $AVAX.
Reason 1: Avalanche Have a Burn Program
We like tokens that have a burn program. Other than BNB, which has an aggressive quarterly burn program, Avalanche’s burn of 100% of transaction fees is the most aggressive of all the top coin projects.
#Avalanche burns all transaction fees.
See how much has been burned so far! https://t.co/LpxU9dtyXy
— Avalanche 🔺 (@avalancheavax) August 20, 2021
For example, Solana burns 50% of their transaction fees which is the next most aggressive blockchain with that mechanism. While the burn program does not make AVAX deflationary, it does reduce the supply. Plus, since it’s a burn of transaction fees every user benefits.
To date, Avalanche has burned almost 700,000 AVAX totaling over $55 million.
Reason 2: Avalanche Grew its Developer Community by 3x in 2021
One of the pillars of crypto projects is that as developer communities grow around that ecosystem. In a year where all top projects grew their developer communities, Avalanche grew theirs by 3x. Avalanche has nearly 300 full-time developers. It’s the 5th fastest growing ecosystem of full-time developers growing 179% in the last year.
The difference between this one and our 2nd reason above is total developer count includes all part-time developers too. Full-time developers are voting with their wallets, their time, and their reputations to work on Avalanche full time.
21/ Ecosystems with 50+ devs growing FULL TIME devs most quickly:@terra_money +312.50%@Solana +307.14%@NEARFoundation +291.43%@FantomFDN +271.43%@Avalancheavax +179.17%@0xPolygon +175.00%@kusamanetwork +161.90%@Dfinity +146.15%@MoonriverNW +125.00%@Algorand +116.67% pic.twitter.com/j7WB4cADFi
— Avichal – Electric⚡️Capital ┻┳ (¤,¤) 🍣🦙 🐇🕳🌲 (@avichal) January 5, 2022
There are two types of developers we are talking about here: Protocol and Ecosystem. Protocol developers are working on the Avalanche protocol to improve it. Meanwhile, ecosystem developers are working on developing the ecosystem. They build dApps or block explorers or bridges or other tools that let us use everything Avalanche has to offer more easily, quickly, or cheaply.
Reason 3: Blizzard Fund $200 Million Fund for Ecosystem Development
Avalanche is making a heavy bet on itself. Ava Labs is among the group creating and funding the $200 million Blizzard Fund exclusively for Avalanche ecosystem development. And Ava Labs aren’t the only one making this bet. Heavy hitters Polychain Capital and CMS Holdings are backing the Blizzard Fund too.
Blizzard is a $200M+ fund accelerating development, growth, & innovation across the Avalanche ecosystem and beyond–contributions from the @avalancheavax Foundation, @AvaLabsOfficial, @PolychainCap, Three Arrows Capital, @dragonfly_cap, @cmsholdings, @_rcapital_, amongst others.
— Blizzard Fund (@BlizzardFund) January 16, 2022
Reason 4: Avalanche C-Chain is 100% EVM Compatible
A few chains decided to convert to EVM (Ethereum Virtual Machine) compatibility. We think Avalanche’s strategy for doing so is one of the smartest. For example, one of their 3 main chains, their C-Chain (C for Contract) is 100% compatible with EVM. This means any dApp built with Solidity for Ethereum or any app running on Ethereum can run on the Avalanche C-Chain too.
5/ Avalanche running the EVM also means that deploying Solidity tooling is simple and works out of the box.
— Jay Kurahashi-Sofue 🔺 (@jayks17) January 13, 2022
What makes the strategy so smart is keeping the EMV activity only on one chain. Bugs, malware, or malicious software builders can do limited damage if there is a vulnerability in their EVM software.
Reason 5: Avalanche’s DeFi TVL Increased over 6000% just Since Last August.
Yes, you heard that right. In 5 months, the Total Value Locked (TVL) on Avalanche’s DeFi platforms grew 6000%. One thing that helped them get there is the Avalanche Rush program. Therefore, it’s a $180 million incentive program to build out Avalanche DeFi Apps.
12/ Decentralized Finance (DeFi) on Avalanche is sitting at $13.5 billion total value locked (TVL).
Thanks to Avalanche Rush, an incentive program for select DeFi apps on Avalanche, TVL has grown rapidly from $200M in August 2021.
A 6,650% increase in just 5 months! pic.twitter.com/PMvjjQcEH9
— Jay Kurahashi-Sofue 🔺 (@jayks17) January 13, 2022
Finally, Yield Yak, one of the recipient apps under this program got $100,000 in late September to help with their development. They now have $385 million in TVL and that’s just one example.
Reason 6: Interoperability Capacity
We’ve already mentioned how Avalanche is completely compatible with Ethereum apps. Therefore, Avalanche is one of our favorite trends for 2022, especially its interoperability capacity. They aren’t the only ones doing it either:
- Cosmos with their Internet of Blockchains
- Polkadot with their parachains
However, Avalanche does it a little differently because they use subnets. A subnet is the consensus mechanism that developers use when they want to create their own chain on Avalanche. Therefore, they can go create their own parallel chain and use their subnet for transactions but they must stake AVAX to do so. Therefore, that’s a good utility use case for AVAX.
This is correct. One of the many strengths of Avalanche is interoperability. Avalanche enables blockchains to leverage its consensus protocol using virtual machines. Learn more on creating VMs on Avalanche: https://t.co/giaFvct4g0 https://t.co/hUyxjSDU2d
— Avalanche 🔺 (@avalancheavax) September 23, 2020
Finally, we like that Avalanche reduce the risk of damage from an Ethereum app extending to other parts of Avalanche by isolating it on the C-Chain.
Reason 7: Quality Partnerships
Here are some of their recent partnerships outside of the Rush program and the Blizzard Fund:
- Circle is now issuing USDC on Avalanche: As a sign they see the chain growing and its DeFi ecosystem getting bigger and better.
- Chainlink’s top oracles: are now on Avalanche too.
- US Big 4 accounting firm Deloitte is partnering with Avalanche. They will use blockchain to help state and local governments manage FEMA emergency assistance during natural disasters.
- Mastercard is partnering with Avalanche on the Start Path program.
Reason 8: Anyone can Stake Avalanche
On the other hand, Avalanche (AVAX) has some of the lowest hardware requirements of any blockchain that offers to stake. Most of these requirements are available on any decent personal computer.
Out of all smart contract-enabled blockchains, #Avalanche is #3 in TVL at $14.8B (incl. protocol staking).
The Avalanche community is ready to keep climbing. pic.twitter.com/j85xWhubjy
— Jay Kurahashi-Sofue 🔺 (@jayks17) December 8, 2021
Finally, even if you don’t set up a validator, you can earn a nice 9.75% staking AVAX.
Reason 9: Very Low Transaction Fees
Avalanche (AVAX) has some of the lowest L1 blockchain fees. Therefore, here are examples of it:
- Create a subnet for 1 AVAX.
- Create a blockchain for 1 AVAX.
- Send AVAX or Mint a New Asset for 0.001 AVAX.
- Create a New Asset for 0.01 AVAX.
Even with low transaction fees, Avalanche remains a top 3 layer 1 blockchain platform in terms of usage.
— Avalanche 🔺 (@avalancheavax) May 20, 2021
Finally, low fees are a good way to bring in new users and grow the ecosystem even more.
Reason 10: AVAX Price Prediction
Here’s what our Altcoin Buzz technical analysis experts have to say about Avalanche:
At the time of writing this article, AVAX is currently trading at $62.84, down 60% from its high of $144.96 in late November.
There’s current support for Avalanche at a nearby $55. If the support holds, our analysts see a potential bounce to new resistance points on the way up at $73, $84, $93, $102, $115, and $131.
As a result, the downside risk is there but fairly limited compared to the upside where if support does not hold at $55, you can expect a drop to near $45. However, if the bounce happens and Avalanche (AVAX) breaks through the resistance of $131, you can expect a move higher to challenge its all-time highs at $178 or potentially $255. In this article, you can see the full price prediction analysis.
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